Please refer to BPD Circular Letter No. 22 dated June
14, 2005 regarding the above subject.
It has been observed that
some banks are not exercising due care in recording complete
and correct reasons for dishonoring cheques. Some banks
return unpaid cheques with the remarks of “insufficient
funds” even when actual reasons of dishonor or defects
in the instruments are different. Since dishonoring of
a cheque due to insufficiency of funds entails consequences
under section 489-F of the Pakistan Penal Code, incorrect,
incomplete or misleading reasons recorded by banks can
be used by unscrupulous elements against innocent accountholders.
Besides bad name, the situation exposes banks to legal
action by the aggrieved accountholders.
3. The foregoing practice
on the part of some banks has been seriously viewed by
the State Bank. Banks are, therefore, strictly advised
to record correct and complete reasons for dishonoring
cheques failing which State Bank will take punitive action
under relevant provisions of law.
Please acknowledge receipt.